A Forest Lake real estate closer is accused of pocketing more than $1.1 million from dozens of real estate transactions in the Twin Cities area by failing to pay off original mortgages or pay forward numerous transaction-related fees.

Two of the properties were being bought by the city of Forest Lake, which lost more than $205,000. Many of the cases involved hundreds or thousands of dollars but the largest, at $594,000, involved a bank that said funds given to the closer, a company owned by Cynthia T. Strand, were not used to pay off the first mortgage on the property.

The ramifications go beyond lost money as victims scramble to pick up the pieces. Forest Lake, for example, had to repay some of the fees and make mortgage payments to avoid potential foreclosure proceedings.

"It's not good for consumers to have mortgages listed to them that they thought they had paid off," Manny Munson-Regala, a deputy commissioner with the Minnesota Department of Commerce, said Thursday. The department, he said, is working to recover the money that was never passed along.

According to the 14 counts of civil charges filed by the Commerce Department, Strand Closing Services in Forest Lake took in money that was meant to pay off mortgages and related fees but failed to pass it along in at least 42 instances. Her title insurance, real-estate closer and notary licenses have been revoked and she may face a civil penalty.

Washington County Attorney Doug Johnson said the Commerce Department has referred the case to his office to review for possible criminal charges. "We're in the middle of looking at it," he said, declining to speculate on whether criminal charges would be filed.

In a March Chapter 7 bankruptcy filing, Strand listed $1.6 million in assets and $2.1 million in liabilities. She could not be reached for comment.

Munson-Regala blamed the increase in real estate fraud cases on what he called "one of the biggest booms and busts in the real estate market that this country has ever seen."

In the good times, he said, fraudulent behavior could be "papered over" with cash flow. "As long as cash kept coming in the front door, it didn't matter that they were using client money for different purposes because they could repay it," he said. Now, he said, many can't keep that up.

The department says that between January 2007 and September 2009 the money was moved from Strand's company account to her personally or to businesses controlled by her and her husband. She is also accused of failing to record title changes in several cases, failing to remit title insurance premiums, using fraudulent practices and demonstrating financial irresponsibility.

Most of the transactions involved residential properties and covered a wide swath, mostly in the northern suburbs, including North Branch, Pine City, White Bear Lake, Wyoming, Center City, Linwood, Harris and Lindstrom. One was in Brainerd, another in Bloomington.

The department did not identify individual victims, using only initials, but did on the Forest Lake case, where the city was buying two adjacent properties for a road project. Strand Closing Services handled the closing, Commerce said, but did not pay numerous fees or a $158,820 first mortgage on one of the properties.

The problems with Strand's company came to light when the bank involved in the $594,000 transaction complained that the funds given to Strand for that transaction were not used to pay off the first mortgage. Shortly after that, investigators started to receive more complaints.

The department said authorities used a search warrant in November to access Strand's home and business when it became apparent that she was destroying business documents.

Munson-Regala said the Commerce Department is working with individual consumers to try to restore the money that was lost.